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Obamacare's key goal threatened by delayed Web marketplaces

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Less than 90 days before Obamacare's government-run health exchanges are due to open up shop, Web insurers are still being locked out of helping sign up uninsured individuals—a lag that threatens to depress enrollments, and jack up insurance rates, experts tell CNBC.

Those experts warned that if dozens of Web-based markets—which already sell insurance online—continue to be shut out of partnering with government exchanges, it could lead to 1 million or more people failing to sign up for insurance under Obamacare.

And, they cautioned, the delay may signal that some of the exchanges won't be ready for business by the official Oct. 1 target date.

So far, none of the government exchanges being run by the federal government, individual states, or federal-state partnerships has given ehealthinsurance.com and other for-profit Web markets the green light to enroll uninsured individuals under the Affordable Care Act's subsidized coverage scheme.

"I'm just totally mystified, puzzled, flummoxed as to why the administration isn't using somebody like me to help," said eHealth CEO Gary Lauer, whose company is a leading industry player among a dozen or more Web-based markets that have sought to partner with various government exchanges.

Lauer noted that he had been an enthusiastic supporter of the new health law championed by President Barack Obama. But the stone-walling, foot-dragging and other inexplicable hurdles that he says his company has faced in offering subsidized insurance under that law has made him increasingly skeptical of the plan.

"I'm still a supporter of the legislation, I'm dubious of its chances for success," Lauer said.

EHealth has been in discussions with the U.S. Centers for Medicare and Medicaid Services regarding a Web-based exchange agreement which would allow the company to enroll subsidy-eligible individuals in the states where a federal exchange will be operating, Lauer said.

Last Friday, Lauer said he has "grown confident and hopeful" that eHealth could ink that deal with CMS "very soon."

But similar hopes by the company on that front have all, to date, come to naught, according to people familiar with the matter.

And Lauer also noted that in the 16 states and District of Columbia, which "are developing their own exchanges, we have yet to enter into a Web-based broker agreement."

Two big states to Web exchanges: Get lost (for now)

Two of the largest U.S. states running their own exchanges said they won't allow Web-based marketplaces from helping them enroll potentially millions of people in those states.

California's exchange told CNBC that it has rejected the idea, at least for the first year, because of technical difficulties of interfacing between the exchange and the Web markets.

"In the first year, we can't custom interface, we don't have enough bandwidth, we don't have the technological capacity," said Anne Gonzales, spokeswoman for the Covered California exchange.

Ironically, Covered California in 2012 awarded a $359 million contract to Accenture to implement its state health exchange, which was being based in part on software from Web marketplace Getinsured.com. But Getinsured.com itself—like other Web markets—cannot sell subsidized coverage of plans that are available on the exchange because of California's rejection of that idea so far.

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New York State revealed to CNBC on Friday that it has also decided, for now, not to allow the Web-based entities to partner with its exchange. "For the 2014 enrollment process, it's not feasible to include the Web brokers," said New York Exchange spokesman Bill Schwarz.

He cited logistical hurdles including ensuring Web marketplaces offer all of the plans available on the state exchange, and creating the technical interface between the exchange and Web sites.

Schwarz—who noted the "tight deadline" to open the exchange—said New York will continue considering whether to use Web marketplaces in coming years.

Lauer and other insurance industry figures said that if Web marketplaces aren't allowed to sell ACA-subsidized insurance plans being offered on the government exchanges, it could dramatically depress enrollment in Obamacare.

"I think you could be talking 1 million to 2 million people" who don't end up enrolling, said Lauer, noting that the US government's goal is getting "6 to-7 million people enrolled in the first year."

If enrollment is less than projected, that could mean big premium hikes in 2015. That's because insurance plans are counting on an adequate number of younger, healthier customers—who are more likely to buy things online—paying premiums to offset the cost of benefits to older customers.

"I think Web-based entities being locked out means less people enrolled, a smaller enrollment means a greater risk pool, and a greater risk pool means higher premiums in the future," said Alan Cohen, chief strategy officer of Liazon, which operates the Bright Choices private benefits exchange.

A March 2012 federal regulation gives Web-based marketplaces the ability to offer insurance plans for sale to people who will be eligible for government subsidies to purchase such insurance being offered by the state exchanges under the ACA.

But the regulation leaves it up to the federal government and states whether to allow Web marketplaces to partner with the individual exchanges they are operating.

Lauer and others argue that having Web markets augment the exchanges would lead to many more people being enrolled under the ACA.

"Last year, 20 million Americans came to eHealth," noted Lauer, whose online exchange comes up high in Google searches for "health insurance."

Before the regulation was adopted in 2012, the ACA would only have allowed federal and state insurance exchanges to sell the subsidized coverage. But lobbying of Health and Human Services Secretary Kathleen Sibelius by governors, members of congress and others lead to to the regulation.

The regulation requires those Web sites to offer all of the same health plans that are offered by the government exchanges and let the customer decide which plan to buy—without any incentives to steer the customer's decisions.

(Read More: You're at mercy of states, not Obama, in health care)

Gary Lauer, CEO eHealth
Source: eHealth
Gary Lauer, CEO eHealth

Canary in the coal-mine

Governors backing that idea included Maryland's Martin O'Malley, who wrote Sibelius a May 2011 letter endorsing using Web-based insurance sites to "supplement the capacity of the state exchanges."

But as of now, Maryland's own state exchange has not agreed to allow eHealth or 17 other Web-based marketplaces who have expressed interest the right to enroll subsidy-qualified individuals in the state exchange's plans.

"We see Web-based entities as potential partners," said Dr. Joshua Sharfstein, chairman of Maryland's exchange.

Sharfstein said the state is studying the idea, and expects a decision by September—within just weeks of the Oct. 1 enrollment opening.

"I don't think this has anything to do with our core readiness" to open the exchange, he said.

But Lauer and others think the delay on allowing participation by Web marketplaces may be a canary-in-the-coalmine indication of overall problems with the exchanges being ready for business by October.

Jane Cooper, president and CEO of Milwaukee-based Patient Care, which advises employees on employer health plans, said she believes the hesitancy or delay in doing so on the part of those exchanges results from "a combination of incompetence and amateurs working on it, and the pressure of everything else going on."

Cohen, the Liazon executive, said, "I think this is an indicator, a leading indicator, of the exchanges lack of readiness to do the things they actually need to do."

"Their ambiguity on Web-based entities is probably an indication that the don't have their act together, so to speak, and they're probably thinking they've got bigger issues than this, and that's kind of scary, no?" Cohen said.

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Cohen also said he doesn't understand why all state and federal health insurance exchanges did not begin partnering with Web-based for-profit insurance marketplaces long ago.

"I'm agog that they're not jumping all over this, and saying, 'Yeah, great, awesome, sign up as many as you can,'" Cohen said. "Why not leverage the economy of scale of a big Web-based entity?"

By CNBC's Dan Mangan. Follow him on Twitter @_DanMangan